AUSTRALIA’S wool price benchmark slumped to its lowest level in eight years this week with insufficient demand for the national offering to sustain values.
The AWEX Eastern Market Indicator closed for the week down 59 cents or 5.9 percent to 945c/kg clean taking it to its lowest point since October 2012.
Growers reacted by passing in 25.7pc of the 33,176-bale offering – up 2904 bales on last week — raising the prospect of a rising stockpile or further pressure on prices in coming months as spring shearing continues.
The main buying interest this week came from China, with some European activity on crossbreds (Modiano), with only small pockets of interest from India.
AWEX senior market analyst Lionel Plunkett said all sectors of the market recorded losses.
“On the first selling day (Tuesday) only Sydney and Melbourne held sales, as Fremantle only required one selling day,” he said.
“The Merino fleece Micron Price Guides (MPGs) fell by 10 to 42 cents for the day.
“The Merino losses combined with losses in the other sectors pushed the AWEX Eastern Market Indicator (EMI) down by 25 cents,” he said.
“The market tracked further downward on the second day of selling.
“The Eastern states MPGs posted further losses of between 12 and 57 cents.”
Mr Plunkett said as the Fremantle region was yet to realise the losses of the previous day, the falls in the Western region were higher, between 69 and 89 cents. The EMI lost another 34 cents to close at 945 cents.
“Due to currency movement, when viewed in US$ terms the fall in the EMI was not as large, the EMI lost US30 cents, dropping to US685 cents, a 4.2pc reduction.”
He said the crossbred MPGs fell by 29 to 58 cents, compounding the losses to the EMI.
“After suffering heavy losses over the previous two series, the oddments recorded the smallest falls this week.
“Locks, stains and crutchings generally fell by 20 to 40 cents, pushing the three Merino Carding Indicators (MC) down by an average of 26 cents.”
Not enough demand
After prices fell further on Wednesday, Fox and Lillie brokerage manager Eamon Timms said it was a tough day for all participants.
“Nobody enjoys days like today; from either side of the fence, it is very very challenging.
“It’s not too much wool, there is not enough demand,” he said.
“Melbourne next week only has 13,000 bales, so everyone knows that next week is going to be a relatively small week, yet this week it couldn’t be maintained, so it is not the supply side.”
Elders National Wool Selling Centre manager Simon Hogan said there was reluctant bidding from the start of Wednesday’s sale with 21 micron lines making under 1000c/kg.
“This early in the Spring you would be suspicious that it is too early for the market to find a bottom and there is not much good news at the retail end, so it’s tough going.
“There is too much wool around for the current demand and a a lot of those who are marketing wool at the moment are still nervous that there is mor3e downside ahead.”
AWEX said the national bale offering reduces next week, due in part to the fact that the Fremantle region does not have a sale. Currently, there are 22,436 bales available to the trade, with only Melbourne and Sydney in operation.
AuctionsPlus online sales also drop
AuctionsPlus commercial manager – digital services Tom Rookyard said the online offer board was used marginally this week, with buyers looking to sit tight as the market continued to slide.
He said 19 bales were sold in two different lots, including a 20 micron Merino fleece for 680c/kg greasy, or 1069c/kg clean. The line had an average staple length of 104mm and 1.5pc vegetable matter content. It was branded Glendale and was offered by Elders Wool.
The other lot to sell was a nine-bale line of 16 micron Merino Pieces that made 776c/kg greasy, or 1429c/kg clean. The line had an average staple length of 74 mm and 8.5pc V. It was branded Brooksdale/F and offered by Elders wool.